Issuance strategy

Domestic borrowing

The estimate for central government finances in 2020 has deteriorated since December as a consequence of the corona crisis. According to the Economic Survey from May, the net financing requirement in 2020 is expected to be kr. 178 billion, corresponding to an increase of kr. 200 billion, cf. Table. The increase primarily reflects lower tax revenues and the government’s economic support packages, of which kr. 40 billion are temporary measures. Including redemptions and the government’s purchases of bonds for financing of social housing, the funding requirement in 2020 is expected to be kr. 294 billion.

Borrowing requirement 2020

Borrowing requirementbillion
Net financing requirement178
Social housing29
Redemption bonds etc.63
​Redemption T-bills24
Borrowing requirement294​
Note: Redemption bonds etc. includes redemptions and buy-backs of government bonds, payments from the central government in currency swaps and net purchases of government funds.     
 

Despite the increase in the funding requirement, the target for issuance of government bonds in 2020 is maintained at kr. 125 billion at market value. This reflects an increase of kr. 50 billion in the issuance target in March, and the aim of securing a stable and predictable bond issuance in 2020. The remaining borrowing requirement is met by short-term issuances, T-bills and commercial papers, CP, and by drawing on the central government’s account. With a balance on the account at year-end in the lower range of kr. 50-75 billion, the total outstanding amount of T-bills and CP is expected to be around kr. 140 billion at the end of 2020.

Given that the financing need in 2020 has materialised faster and more suddenly than during previous crises, and that part of the increased borrowing requirement is temporary, there has been a rapid build-up of the government’s short-term loan programmes, especially the government’s two CP programmes. The strategy is to reduce the outstanding amount of short-term securities as the temporary measures are phased out, and gradually replace them with longer maturity bonds depending on the borrowing requirement.

Foreign borrowing

A significant part of the increased funding requirement in 2020 is met by issuance in the government’s two CP programmes. The government may also issue longer maturity bonds in foreign currency (European Medium Term Notes programme, EMTN). So far, there has not been any EMTN issuance, but the programme is active, and the government can issue EMTNs within a short time.